What conduct justifies summary dismissal?

The recent Fair Work Commission decision of John v The Star Pty Ltd provides an insight into just what level of conduct is required to justify the summary dismissal of an employee.

Background

Mr John had worked for the employer (who operates the Star City Casino Sydney) for just over 5 years as a security officer.  Part of his role on occasions was to perform identification security checks at one of the entrances to the casino.  On one particular night, a 17 year old female was ejected from the casino after trying to gain entry into the “Marquee” nightclub which was located within the casino.  In order to get to the Marquee nightclub, the 17 year old should have already passed an identification security checkpoint before then being checked again at the entrance to the nightclub. During the second check at the Marquee, it was revealed that the underage person had used the ID of an 18 year old friend to attempt to gain access to the nightclub which she revealed to the Marquee security personnel when they began asking questions.

With the entry of a minor into a licensed area being a serious matter for the casino (they were fined $5,000 for the incident), they conducted an investigation which included examination of CCTV footage. Retracing the passage of the underage person back to her entrance into the casino, it was revealed that Mr John had performed a check on the minor’s presented identification and had allowed her into the building.  Either the same night, or early the next morning, Mr John was advised that it appeared he had allowed the minor entry. After taking a brief statement from Mr John, he was stood down on full pay pending further investigation.

Mr John subsequently attended a disciplinary meeting with his representative.  He was questioned and shown the footage of him letting the minor into the casino.  Mr John admitted that he had not performed a satisfactory examination of the relevant ID. However, he submitted that there were other contributing factors that led to the unsatisfactory examination.  Mr John claimed that the entrance at which he was performing the checks was understaffed on that particular night and that he had asked for assistance but that it had not been provided.  He claimed that as a result he was stressed and distracted at the time of the ‘negligent’ check.

After a short adjournment of the meeting, Mr John was advised that he was being summarily dismissed for failing to conduct a proper ID check.  One of the findings made against him in particular was that he …”failed to look at the female and vet the ID”.  The termination was confirmed in writing 22 days later with the justification being  that he was summarily dismissed “… due to a serious breach of your employment duties and the Casino Control Act 1992, specifically permitting a minor to enter the main gaming floor.”

Mr John subsequently lodged an unfair dismissal application.

The employee’s position

Mr John argued that he had been terminated for a “one-off mistake” and that in the absence of some type of “extreme aggravating circumstance” in relation to that mistake, that summary dismissal was harsh, unjust or unreasonable.  Mr John’s representative at the hearing referred to his long history of good service to point out the alleged disproportionate nature of the disciplinary action taken against him.

Mr John confirmed his immediate admission to the unsatisfactory nature of the ID check, but qualified this again by saying that there were extenuating circumstances.  Mr John pointed to the differential treatment of other employees who had made ID vetting errors and that there had been a number of similar incidents which had not resulted in termination. Significantly, in terms of the decision handed down by Commissioner Cambridge, Mr John argued that there is a common law argument that it is “only the most exceptional acts of gross negligence that could provide justification for summary dismissal.”

The employer’s response

The employer argued that the conduct, which was largely admitted and not contested, was so severe that it constituted gross negligence.  They argued that “the Applicant failed to conduct the ID check in accordance with the standard of care which a reasonably competent Security Officer would be required to observe.”

The specifics of the way in which the ID check was conducted were discussed in detail, in particular that on the employer’s evidence, Mr John failed to even look at the minor when checking the ID and that such conduct was a significant departure from the standard of care expected of a person in his position.  They claimed “… it would be unsafe to reinstate the applicant to a position where there was risk of reoccurrence.”

The employer also claimed that in terms of the ID used by the minor to gain entry to the casino, the minor had no resemblance to the person depicted, which again presumably highlighted the extent of the negligence of Mr John.

The Decision

In making his decision, Commissioner Cambridge noted that the wording in Mr John’s termination letter inferred that he knowingly allowed the minor into the building, whilst in submissions there was no accusations levelled at Mr John to the effect that he had intentionally allowed the minor entry.  The Commissioner clarified that the actual justification for the summary dismissal was that there had been “a gross dereliction of duty”.

The Commissioner then considered the level of conduct required to justify summary dismissal:

“In general, a summary dismissal will usually be implemented in circumstances where an employer believes that an employee committed an act of serious misconduct. In effect, summary dismissal will usually be confined to circumstances that have as a prerequisite, the clear presence of a guilty mind, or mens rea, in respect to the action of the employee.”

The Commissioner subsequently examined the evidence and in particular the CCTV footage in detail and ultimately decided that whilst there had been negligent conduct by Mr John, it was not sufficient to justify summary dismissal:

“I believe that the negligent and inadequate performance of duty by the applicant did not represent such gross, grave, serious or significant departure from the standard of care which should have been exercised and which caused substantial loss or damage to the employer, as to render that action valid reason for summary dismissal.“

Significantly, the Commissioner then stated that “… although the common law position may provide for summary dismissal to be justified in circumstances involving gross negligence, it seems to me, that the statutory position may not.” 

The Commissioner then examined the wording of the Small Business Fair Dismissal Code, in particular, the circumstances that it provides for in terms of permitting a small business to summarily dismiss an employee.  He noted that a large business would reasonably be expected to meet, or more likely exceed, the threshold provided in that Code.

As to whether negligence formed one of the acts upon which a summary dismissal might be justified, the Commissioner stated:

“… the Code’s use of the words, “Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures” when combined with both the absence of any mention of grossly negligent or similar conduct, and the mention of reporting the employee’s conduct to the police, is suggestive of a requirement that there be a wilful character to any action which would justify summary dismissal, as opposed to other dismissal.”

The Commissioner subsequently confirmed his belief that there must be some wilful element to the negligence to justify serious misconduct.  The Commissioner referred to what he considered to be evolution in this area of employment law and that courts and tribunals “appear to be gradually casting off the proposition that negligence would justify summary dismissal…”

The Commissioner held that the dismissal of Mr John was harsh, unjust and unreasonable, noting also some defects in the procedure undertaken by the Employer to dismiss Mr John, in particular, a failure to provide a proper opportunity to respond due to the particular conduct of the disciplinary meeting and the timing with which the CCTV footage was shown.  The Commissioner subsequently ordered the reinstatement of Mr John to his employment.

Implications for Employers

The discussion of Commissioner Cambridge is very plain in its meaning.  The common law appears to be evolving so as to further limit instances where summary dismissal may be justified.  This decision contemplates that without the presence of a wilful element to the alleged offence (i.e. wilful negligence), summary dismissal may not be justifiable.

Aitken Legal recommends that employers seek legal advice before taking such steps as the common law in this area will continue to develop and an assessment of whether an employer has sufficient grounds to summarily dismiss an employee is vital.